Critics Get Crossways with New Cross-State Air Rule

09/01/2011 | Angela Neville, JD

From the East Coast to the Lone Star State, a number of elected officials and power industry representatives are bashing the new aggressive regulation aimed at controlling specific power plant emissions.

Complying with a federal court mandate, the U.S. Environmental Protection Agency (EPA) finalized the Cross-State Air Pollution Rule (CSAPR) on July 6. The new standard requires 27 states to reduce power plant emissions that contribute to ozone and/or fine particle pollution in other states. Barring a court challenge, the new rule will begin taking effect as soon as early 2012 and be fully in place by 2014. It’s aimed at slashing power plant pollution that drifts across state borders and prevents downwind states from achieving ozone and particulate matter standards. The EPA said that by 2014 the CSAPR rule and other EPA and state actions will cut sulfur dioxide emissions by 73%, and trim nitrogen oxides emissions by 54%, below 2005 levels.

The new rule replaces the EPA’s 2005 Clean Air Interstate Rule (CAIR), which was issued under former President George W. Bush and rejected in 2008 by a federal court that said its trading provisions wouldn’t adequately protect communities against pollution blowing in from nearby states. The court allowed CAIR to remain in place temporarily while the agency worked to finalize this replacement rule.

“These Clean Air Act safeguards will help protect the health of millions of Americans and save lives by preventing smog and soot pollution from traveling hundreds of miles and contaminating the air they breathe,” said EPA Administrator Lisa Jackson.

By 2014, utilities are projected to spend $800 million annually on additional emissions controls, combined with $1.6 billion per year in capital investments already under way when CAIR was issued, according to the EPA. The agency also estimates that the improved air quality resulting from the CSAPR will result in $120 billion to $280 billion in annual health benefits.

Testy Reactions Down in Texas

In the final version of the CSAPR rule, the EPA decided to expand its scope to include Texas.

Texas Gov. Rick Perry, who at press time in August appeared to be considering a run as a Republican candidate in the 2012 presidential race, strongly criticized the new environmental rule. On July 7, he called the EPA’s action “another example of heavy-handed and misguided action from Washington, D.C. that threatens Texas jobs and families and puts at risk the reliable and affordable electricity our state needs to succeed.”

“Texas will keep standing up to this destructive federal overreach and working to enhance environmental protection and domestic energy exploration and production,” he emphasized.

In a similar vein, 31 members of the state’s congressional delegation in early August urged the White House in a letter to delay implementation of the rule, according to the Fort Worth Star Telegram.

In addition, the Electric Reliability Council of Texas, the operator of the state’s major power grid, has expressed concern that the rule could lead to a future shortage of power generation. CEO H.B. “Trip” Doggett said in a July 19 statement that the rule, if implemented as written, could within a few years cause Texas to “face a shortage of generation necessary to keep the lights on.”

The Texas Public Utility Commission estimated the new standard could force 18 plants—many of which were built in the 1970s—to install expensive equipment, change fuel, or prematurely retire.

The EPA’s Jackson said such fears in Texas were exaggerated and pointed out that some utilities have already moved to clean up their coal-fired plants. “Texas has an ample range of cost-effective emission reduction options for complying with the requirements of this rule without threatening reliability or the continued operation of coal-burning units,” she said.

Other Complaints About the New Standard

The American Coalition for Clean Coal Electricity (ACCCE), an association that includes coal companies and utilities, funded a recent study that concluded the additional costs related to implementing the rule would lead to a 13% drop in coal-fired generation. It said electricity prices would increase by double digits for ratepayers in Indiana and more than 20 other states.

“America’s coal-fueled electric industry has been doing its part for the environment and the economy, but our industry needs adequate time to install clean coal technologies to comply with new regulations. Unfortunately, EPA doesn’t seem to care,” said Steve Miller, ACCCE president and CEO.

Seeking a Balanced Approach

It’s unclear if the new rule will be challenged in court. In the meantime, utilities have a mandate to start working on compliance strategies so their facilities will be ready when the new rule goes into effect next year. To remain competitive in today’s challenging economy, utilities must comply with the new EPA regulation so they can avoid expensive penalties and adverse media coverage.

The U.S. electric generation industry needs a sensible air quality policy that balances economic demands with protecting human health. The EPA should consider the costs borne by utilities that are being asked to comply with the CSAPR rule in a short time frame and their need for flexibility in implementing the rule in order to avoid future power shortages. Regulations that put a strain on the power generation system and threaten the reliable delivery of electricity can also cause serious adverse health consequences.

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